10/20/2008 @ 8:33PM

Bad Day For Midway

Sumner
Redstone
Sumner Redstone
‘s videogame publisher Midway Games had a doozy of a day, losing 12% of its market value with the billionaire wrapped up in talks with his creditors.

Shares in
Midway Games
, whose game titles includes Unreal Tournament 3 and Mortal Kombat, fell 15 cents to close at $1.10 in New York on Monday, down 67.1% from its year-ago price.

Earlier this month, Redstone’s holding company
National Amusements
, which has controlling interests in
Viacom
and
CBS
, sold approximately $400.0 million of its shares in the two media companies to pay down borrowings and keep himself in compliance with debt covenants. (See: “Sumner Sales For Viacom And CBS.“)

The capital may have been needed to pay back borrowed money used to keep National Amusement’s theater chains operating, according to Variety.com, or possibly to turn around and lend it to the struggling Midway Games just to keep the company afloat.

Closely-held National Amusements said last week it was in talks with bankers to renegotiate terms on $1.6 billion in debt due to the sharp fall in the value of CBS and Viacom, shares of which Redstone used as collateral for the loan. If Redstone is unable to refinance his debts, he may have to sell more of his holdings in CBS and Viacom, analysts have said. The New York Post asserted Sunday that a sale of either one of the companies was a distinct possibility given the state of Redstone’s finances.

Matthew V.
Booty
Matthew V. Booty
, interim chief executive at Midway Games, took over in March after his predecessor, David Zucker, resigned after four years of flagging corporate performance. Since 1999, the Chicago-based company has lost an estimated $580 million.

On Thursday, the video game publisher said it had ended some game licenses and as a result will post a larger loss in the third quarter than previously expected. Midway now forecasts a loss of 70 cents per share, or 60 cents per share excluding one-time items. Previously, Midway predicted a much smaller quarterly loss of 49 cents per share, or 39 cents before special charges.